Viacom TV deal sets Skype duo on way to third internet coup

The entrepreneurs behind the Kazaa music-sharing business and Skype, the company that popularised internet telephony, appear on the verge of creating an extraordinary third web success story.

The Scandinavian duo Niklas Zennstrom and Janus Friis, who met in the Nineties while working at the Danish telecoms operator Tele2, yesterday signed a breakthrough deal for their new internet television service, Joost.

Viacom - the media giant which owns the television networks MTV and the Comedy Channel as well as the film studio Paramount Pictures - agreed to license its content for viewing on Joost, which is styling itself as "a new way to watch TV".

The service will be launched to the public in the spring, offering television-quality video over the internet. Users will be able to create their own channels, watch what they want when they want, share their own videos and chat with other users. The service will be funded by advertising, with the proceeds split between Joost and the media content companies.

"We built this platform from the ground up, with companies like Viacom in mind," Mr Friis said. "Our platform provides scalable distribution, in a completely safe environment that protects the interest of content owners and advertisers, while delighting viewers."

In the long run, Joost might become a rival to traditional television channels. More immediately, though, it threatens to be a problem for YouTube, the wildly popular video-sharing site acquired by Google last year for $1.65bn (£844m). Last month, Viacom abandoned talks to license its content to YouTube, and demanded it take down thousands of clips uploaded by YouTube users who, it says, are breaching Viacom copyright. MTV shows such as Laguna Beach will be offered for viewing on Joost, along with a selection of recent and classic Paramount films.

Philippe Dauman, chief executive, said Viacom "couldn't be prouder to be a key partner in the launch of the next generation in broadband video technology".

Joost can offer better-quality video than YouTube because it uses the peer-to-peer file-sharing technology first used by its founders at Kazaa. Messrs Friis and Zennstrom created Kazaa in 2001, allowing users to reach into each other's computers and share music and other files. It was sold to an Australian firm. Skype took barely a year from its launch to win a million users, who were able to make free international telephone calls over the internet. The business was sold to eBay in 2005 for $2.6bn.